Commodity Diffusion Index pointing toward higher inflation. While weak dollar has helped push commodity prices higher, a Diffusion Index converted to a strong currency like the Swiss Franc also is at very high inflationary levels.
Commodity Diffusion Index pointing toward higher inflation.
It has become more and more difficult to filter out the short term economic noise. By focusing on this minutia, investors can easily lose sight of the big picture.
It may feel like a deflationary environment, but the CPI is not likely to end 2010 with a twelve month deflationary reading.
Looking ahead to 2011, we are keeping a close eye on Housing, Food and Wages, which all could be bottoming out.
The greatest danger in late 2010 and 2011 is monetary debasement inflation, not demand based inflation.
Mild CPI Inflation Expected In 2010 (+3.2%); Higher PPI Inflation (+6.0%)